M/S:Modi Food Products Co. Limited Vs.
Shri Faqir Chand Sharma & Ors  INSC 36 (8 May 1956)
AIYYAR, T.L. VENKATARAMA JAGANNADHADAS, B.
SINHA, BHUVNESHWAR P.
CITATION: 1956 AIR 628 1956 SCR 560
Industrial Disputes (Appellate Tribunal) Act,
1950, No. XLVIII of 1950-Ss. 23 and 22(a)-Lay off during pendency of prior
dispute-Application under s. 23 alleging breach of s. 22(a) Tribunal finding
lay off justified-Application should be dismissed Quantum of compensation
payable-When proviso (b) to s. 25-C, Industrial Disputes Act applicable.
During the pendency of an appeal before the
Labour Appellate Tribunal in respect of a prior industrial dispute between the
same parties the management laid off certain workmen and offered to pay
compensation equal to half the basic wages and dearness allowance for the first
45 days in accordance with the provisions of proviso (a) to s. 25-C, Industrial
Disputes Act. The workmen made an application to the Tribunal under s. 23 of
the Industrial Disputes (Appellate Tribunal) Act, 1950 alleging that there was
a breach of s. 22(a) of the same Act, and that the lay off was not bona fide
and claimed full wages for the entire period of the lay off as compensation.
The Tribunal held that the lay off was justified but that the workmen were
entitled to half the basic wages and dearness allowance not merely for the
first 45 days but for the entire period under proviso (b) to s. 25-C.
Held, that on the finding of the Tribunal
that the lay off wag justified the application under s. 23 was liable to be
Proviso (b) to s. 25-C, Industrial Disputes
Act, is only applicable in case of a second and distinct lay off and does not
apply to a period subsequent to the first 45 days of one continuous lay off.
CIVIL APPELLATE JURISDICTION: civil Appeal
No. 353 of 1955.
On appeal by special leave from the judgment
and order dated the 22nd August 1955 of the Labour Appellate Tribunal of India
at Lucknow in Misc. Case No. 111-C-650 of 1954.
Veda Vyas, (S. K. Kapur and N. H. Hingorani,
with him) for the appellant.
J. N. Bannerji, (P. C. Agarwalla, with him)
for the respondent.
561 1956. May 8. The Judgment of the Court
was delivered by VENKATARAMA AYYAR J.-The appellant is a company registered
under the Indian Companies Act, and owns a factory called Modi Oil Mills in the
district of Meerut. The respondents are workmen employed in the Mills. The
business of the Mills consists in the manufacture of oils and paints. On
12-7-1954 the management put up the following notice:
"Notice is hereby given that due to
non-availability of groundnut seed and neem seed at the parity with the ruling
prices of the groundnut oil and neem oil, the Management is reluctantly
compelled to close the Groundnut Crushing Section and Neem Section till the
next groundnut season and thus the workers in the attached list are surplus and
their services are laid off with effect from 14th July, 1954.
Workers, thus affected, shall be paid
compensation according to Industrial Disputes (Amendment) Act, 1953, subject to
conditions laid therein. It is further notified that the time of the attendance
as provided in Section 25(D) and (E) shall be 10 a.m. for all the laid off
Pursuant to this notice, 142 workmen mentioned
therein, being the respondents in this appeal, were laid off from the 14th July
1954. On 26-7-1954 the workmen acting through their Union sent a notice to the
management demanding full wages for the period of lay off on the ground that it
was unjustified and illegal. The management denied these allegations, and.
refused the demand. This being an industrial dispute as defined in section 2(k)
of the Industrial Disputes Act XIV of 1947, in the ordinary course, proceedings
would have been taken with reference thereto under the provisions of that Act.
But there was at that time another industrial dispute between the parties
pending final adjudication. That dispute had been referred -under section 10 of
the Industrial Disputes Act for adjudication to the Regional Conciliation
Officer, Meerut. He had pronounced his award, and against that, both the
parties 562 had preferred appeals to the Labour Appellate Tribunal, and they
were pending at the date of the, notice. The Industrial Disputes (Appellate
Tribunal) Act XLVIII of 1950, hereinafter referred to as the Act, contains
special provisions with reference to certain disputes which might arise between
parties, when there is already pending adjudication between them another
industrial dispute. They are sections 22 and 23, which are as follows:
"22. During the period of thirty days
allowed for the filing of an appeal under section 10 or during the pendency of
any appeal under this Act no employer shall(a)alter, to the prejudice of the
workmen concerned in such appeal, the conditions of service applicable to them
immediately before the filing of such appeal, or (b)discharge or punish,
whether by dismissal or otherwise, any workmen concerned in such appeal, save
-with the express permission' in writing of the Appellate Tribunal.
23. Where an employer contravenes the
provisions of section 22 during the pendency of proceedings before the
Appellate Tribunal, -any employee aggrieved by such contravention, may make a
complaint in writing, in the prescribed manner to such Appellate Tribunal and
on receipt of such complaint, the Appellate Tribunal shall decide the complaint
as if it were an appeal pending before it, in accordance with the provisions of
this Act and shall pronounce its decision thereon and the provisions of this
Act shall apply accordingly"'.
On 24-8-1954 the respondents filed an
application before the Labour Appellate Tribunal under section 23 of the Act.
Therein, they alleged that the layoff was not
bona fide, because the ground given therefor, namely, non-availability of
groundnut and neem seeds at parity with ruling prices was not true; that
further in view of the pendency before the Labour Appellate Tribunal of an
industrial dispute between the parties, the lay-.off was in contravention of
section 22(a) of the Act, and they accordingly prayed 563 that they might be
awarded by way of compensation full wages for the entire period of the lay off.
The appellant contested the claim. It contended that the non-availability of
groundnut and neem seeds as ,mentioned in the notice was true, and that the lay
off was bonafide. It also claimed that section 22(a ) of the Act had no
application to the dispute, as the notice distinctly stated that the workmen
would be paid compensation as provided in section 25-C of the Industrial
Disputes Act as amended by Act XLIII of 1953.
It also contended that under that section
compensation was payable only for the first 45 days at the rate mentioned in
the body of the section and not for any period subsequent thereto. The Tribunal
held that the layoff was justified.
It further held on a construction of section
25-C that the workmen were entitled to half the basic wages and dearness
allowance not merely for the first 45 days but for the entire period, and that
as the appellant did "not observe them provisions' of that section",
there was an alteration of the conditions of service within section 22(a) of
It accordingly awarded compensation for the
whole of the period at 50 per cent. of the basic wages and dearness allowance.
Against this decision, the management has preferred this appeal by special
On behal of the appellant, Sri Veda Vyas
contended firstly, that on its finding that the lay off was justified, the only
order which the Tribunal could have passed was one of dismissal of the petition
filed by the respondents and that the award of compensation was in consequence,
without jurisdiction; and secondly, that on a true construction of section 25-C
of the industrial Disputes Act, the workmen were entitled to compensation only
for a period of 45 days as provided in proviso (a) to section 25-C. We are of
opinion that both these contentions are well-founded.
On the first question, the jurisdiction of
the Tribunal to grant relief under section 23 of the Act arises only if it is
made out that there was contravention of section 22 by the management. The
respondents ,understood this position quite correctly, and with 564 view to
bring themselves within section 23, they alleged that the layoff was not bona.'
fide, inasmuch as, in fact, groundnut and neem seeds were available. This
contention rests on the supposition that the conditions under which workmen
could be laid off are conditions as to their service, 'and that when the
employer lays off workmen without proper grounds there for, it is a violation
of the conditions of service within section 22(a) of the Act.
There was some argument before' us whether
lay off, whether justifiable or otherwise, could be -brought within section
22(a) of the 'Act as amounting to breach of the conditions of service. On the
one hand, the argument was that the expression "conditions of
service" would include only such conditions as would operate when the
workmen were actually in service ,such as the quantum of wages, hours of work,
provision for leave and so forth, and that when there was a lay off, these
conditions could by their very nature have no application, and that if the layoff
'was unjustified, that would give the workmen a right to take proceedings under
the 'provisions of the Industrial Disputes Act, but that they could make no
claim under section 23 as for a breach of the provisions of section 22(a). The
contention on the other side, was that the workmen and the management ,should
be deemed to have agreed that there would be lay off only for good and proper
reasons and under conditions permitted by law, and that if those conditions
were not satisfied, the lay off would be an alteration of the conditions of
service within section 22(a). The question is one of some importance, but it is
unnecessary to express any opinion on it, as counsel for the appellant conceded
after some argument that conditions under which the workmen could be laid off
would be conditions of service. On this -footing, he contended that as the lay
off *as, in fact, justified, there Was no breach of those conditions, and that,
in consequence, section 22(a) of the Act had no application. On behalf of the
respondents, it is argued that the lay off must, by its very nature, be
temporary and of short duration, and that if it is for 565 a long or indefinite
period as in the present case, it could not be said to be a proper lay off such
as could be deemed to have been agreed to by the workmen, and that section
22(a) of the Act would, therefore, be applicable.
It is common ground that there are no
statutory rules prescribing the conditions under which there could be a lay
off. If there had been, they would operate as conditions of service between the
parties, and then the question would simply have been whether there had been a
compliance with them. Under the provisions of the Industrial Employment
(Standing Orders) Act XX of 1946, certain Standing Orders had been framed with
reference to this matter. Counsel on both sides state that after the enactment
of the Industrial Disputes (Amendment) Act XLIII of 1953, they are no longer in
force, and that there are no statutory provisions applicable to the present
dispute. We must, therefore, decide the question on the footing that the only
condition which the parties might be taken to have agreed to is that the lay
off should be for adequate grounds and for a reasonable period. On this
question, there is a clear finding in favour of the appellant. The Tribunal has
found that groundnut and neem seeds were not available at parity prices, and
that for that reason, the work had to be stopped. It is not likely that
businessmen would cut their profits to spite the workmen. The period of the lay
off was expressed to be until the next groundnut season and we have been told
that the season for groundnut begins sometime in November December. In fact,
all the respondents have been reemployed in relays from September onwards, and
by the first week of December all of them had been absorbed. On the finding of
the Tribunal that the lay off -was justified, it follows that the application
of the respondents under section 23 of the Act was liable to be dismissed on
the ground that there had been no contravention of section 22(a).
But., notwithstanding this finding, the
Tribunal went on to hold that the application under section 23 of the Act was
maintainable. To appreciate the 566 reasoning 'behind this decision, it is
necessary to refer to section 25-C of the Industrial Disputes Act, which runs
"Right of workmen laid-off for compensation:
Whenever a workman (other than a badli workman or a casual workman) whose name
is borne on the muster rolls of an industrial establishment and who has
completed not less than one year of continuous service under an employer is
laid-off, he shall be paid by the employer for all days during which he is so
laid off, except for such weekly holidays as may intervene, compensation which
shall be equal to fifty per cent. of the total of the basic wages and dearness
allowance that would have been payable to him bad he not been so laid off:
Provided that(a)the compensation payable to a
workman during any period of twelve months shall not be for more than
forty-five days except in the case specified in clause (b);
(b)if during any period of twelve months, a
workman has been paid compensation for forty-five days and during the same
period of twelve months he is again laid off for further continuous periods of
more than one week at a time, he shall, unless there is any agreement to the
contrary between him and the employer, be paid for all the days' during such
subsequent periods of lay-off compensation at the rate specified in this
The appellant does not dispute the right of
the respondents to compensation, and, in fact, they were informed by the very
notice dated 12-7-1954 under which they were laid off, that compensation would
be paid to them in accordance with section 25-C. It is as regards the quantum
of compensation payable under that section that the parties are disagreed.
It will be remembered that the lay off
commenced on 14-71954 and was to continue until the next groundnut season, and
that the workers were actually absorbed in batches from September, and that by
the first week of December, they had all of them been employed. There was thus
one continuous lay off 567 for periods varying from 57 to 121 days. The
contention of the appellant is that, on these facts, the workmen were entitled
to compensation only in accordance with proviso (a) to section 25-C, and that
they would therefore be entitled to 50 per cent. of the basic wages and
dearness allowance for the first 45 days and for the rest of the period, no
compensation was payable. The respondents agree that proviso (a) to section
25-C applies to the first period of 45 days; but they contend that for the
remaining period of the lay off, the governing provision is proviso (b) to section
25-C, and that under that proviso, they would ,be entitled to compensation as
provided in the body of the section, i.e. 50 per cent. of the basic wages and
dearness allowance, for the remaining period also. This contention -was
accepted by the Tribunal, and holding that the compensation awarded by the
appellant was not in accordance with section 25-C, it decided, as already
mentioned, that there was an alteration of the conditions of service, and
accordingly awarded compensation under section 23 of the Act.
It is contended for the appellant that the
construction which the Tribunal has put on section 25-C is erroneous, and that
the amount of compensation offered by the appellant was the correct amount
payable under that section. As already stated, there is no dispute that the
compensation payable for the first 45 days has to be determined in accordance
with proviso (a) to section 25-C. The dispute is only as to whether for the
rest of the period of lay off the workmen are entitled to compensation under
proviso (b) to section 25-C. That proviso would apply only if the workmen had
been paid compensation for 45 days, and were again laid off for further periods
of more than one week at a time. On the wording of the section, it is clear
that the lay off which falls within proviso (b) to section 25-C must be
distinct from that for which compensation had been paid in accordance with
proviso (a) to section 25-C and subsequent thereto in point of time. And as, in
the present case, there was one continuous lay off for the entire period,
proviso (b) could have no application.
568 Counsel for the respondents contends that
though there was only one lay off, it should notionally be split up into two,
the first period being the 45 days covered by proviso (a) to the section and
the rest of the period, by proviso (b) It is arguable that there could be a
second and distinct lay off following the first without a break, as for example,
when the management first notifies lay off for a period of 45 days and pays
compensation there for, and again issues a fresh notification at the end of the
period declaring a further lay off for a period exceeding 7 days in
continuation of the notified lay off, and that that would fall within proviso
(b). But, in the present case, there was only one notification., and the period
specified therein was up to the next season. By no straining of the language. of
proviso (b) to section 25-C can such a layoff be brought within its purview.
The respondents rely in support of their contention on the decision in
Automobile Products of India Ltd. v. Their Workmen(1). But that decision gives
no effect whatever to the words "again laid off", and moreover, if the
construction adopted therein is correct, there would be no need for the
provisos (a) and (b), as what would be -payable under them, according to the
respondents, would become payable under the body of the section itself. If, as
observed in the above decision, this conclusion leads to an anomalous position,
it is for the legislature, if it thinks fit, to amend the section and not for
the Tribunal to construe it otherwise than what it plainly means. We are
accordingly of opinion that the respondents are entitled to compensation only
for the 45 days as provided in proviso (a), and that as the appellant had
offered to pay the same by its notice dated 12-7-1954, there was no aIteration
of the conditions of service within section 22 of the Act, and that, in consequence,
the petition of the respondents was liable to be rejected.
We accordingly allow the appeal, set aside
the order of the Tribunal, and dismiss the petition of the respondents. The
parties will bear their own costs.
(1) [19551 1 Labour Law Journal 67.